I own, privately, a piece of land over which I wish to grant pedestrian and vehicular passage as my contribution to a hotel Joint Venture. The land will not be transferred to any other entity and I expect to charge, by contract, an annual or monthly fee to the other Joint Venture party (the hotel development company) on which I expect to pay the appropriate income tax. On completion of this transaction, as envisaged, are there implications concerning SDLT, CGT or any other taxation liabilities which I should need to consider?
Hi Keith. Thank you for your response.
I had earlier received some informal advice which I hoped your professional reply might clarify. Previously, I had considered a lease only to be told that would be a "deemed capital gains tax disposal" for consideration equal to the open market value of the lease. This value
would be determined having regard to the original cost of the land, the current land valuation and the amount of income to be derived throughout the lifetime of the lease. Quite unfair. SDLT would be chargeable also based on the market value of the lease at up to 4%. I had hoped that a JV might be more straightforward. Can you kindly please confirm (or otherwise) that the same HMRC rules would be applied to a JV agreement as to a lease as described above. Many thanks in anticipation. Alan Drake.